Chapter III

Investment Liberalization and Facilitation 

Article 18 The Hainan Free Trade Port shall implement investment liberalization and facilitation policies by adopting an approval system with minimum requirements for investment, improving the system for investment promotion and protection, strengthening protection of property rights, ensuring fair competition, and fostering an open, transparent and predictable investment environment.

The Hainan Free Trade Port shall fully liberalize investment access, except for those sectors subject to approval by the state involving national security, social stability, redlines for ecological protection, and major public interests, etc.

Article 19 The Hainan Free Trade Port shall implement an administration system of pre-establishment national treatment plus negative lists for foreign investment. The negative lists for foreign investment access exclusively applicable to the Hainan Free Trade Port shall be made by the relevant departments under the State Council in conjunction with the Hainan provincial authorities, and be issued upon the approval of the State Council.

Article 20 The state relaxes regulation of market access in the Hainan Free Trade Port. The special list (special measures) for relaxed regulation of market access in the Hainan Free Trade Port shall be determined by the relevant departments under the State Council in conjunction with the Hainan provincial authorities.

The Hainan Free Trade Port shall implement investment facilitation measures focusing on process supervision and management and gradually implement a system of market access upon commitment. The specific measures thereof shall be formulated by Hainan provincial authorities in conjunction with relevant departments under the State Council. 

Article 21 The Hainan Free Trade Port shall, in accordance with the principles of convenience, efficiency and transparency, streamline process, increase efficiency, and improve government services; establish systems facilitating the establishment, operation, and withdrawal of market entities; and optimize bankruptcy procedures. The specific measures thereof shall be formulated by the Hainan Provincial People's Congress and its Standing Committee. 

Article 22 The state protects the investment, earnings and other legitimate rights and interests of natural persons, legal persons, and unincorporated organizations in the Hainan Free Trade Port in accordance with the law, and strengthen the protection of small and medium-sized investors. 

Article 23 The state protects the intellectual property rights of natural persons, legal persons, and unincorporated organizations in the Hainan Free Trade Port in accordance with the law, and shall facilitate intellectual property rights creation and application as well as enhance relevant management and service capabilities, shall establish sound mechanisms such as supervision through classified credit management and sanctions for dishonesty in the field of intellectual property rights, and shall punish infringement of intellectual property right in strict accordance with the law. 

Article 24 A unified, open, competitive and orderly market system shall be established in the Hainan Free Trade Port, where fair market competition shall be protected through enhancing the fundamental position of the policies on competition, implementing a review system for fair competition, and strengthening and improving law enforcement in anti-monopoly and anti-unfair competition.

All market entities in the Hainan Free Trade Port shall enjoy equal treatment in accordance with the law in terms of obtaining access licensing, business operations, access to factors of production, standard-setting, preferential policies, etc. The specific measures thereof shall be formulated by the Hainan Provincial People's Congress and its Standing Committee.

Chapter IV

Fiscal and Taxation Systems 

Article 25 During the establishment and development stage of the Hainan Free Trade Port, the Central Government shall give appropriate financial support to the Hainan Free Trade Port according to its actual situation and the changes in its taxation system. The Hainan provincial authorities are encouraged to issue local government bonds to finance project development in the Hainan Free Trade Port within the quota approved by the State Council. Hainan provincial authorities shall set up a government-guided investment fund for the development of the Hainan Free Trade Port, which is operated in a market-oriented manner.

Article 26 The Hainan Free Trade Port may independently decide to reduce or exempt the payments to government-managed funds, or defer the collection of such payments in accordance with development needs, except for those related to an ecological compensation.

Article 27 A taxation system that meets local needs shall be established for the Hainan Free Trade Port, in line with the direction of national tax reform and under the principles of a simple and reasonable tax structure, full optimization of all elements, significant reduction of tax burden, clear revenue attribution, and balancing of revenue and expenditure.

To introduce island-wide special customs operations, taxes and fees such as the value-added tax, consumption tax, vehicle purchase tax, urban maintenance and construction tax, and education surcharge shall be consolidated, and sales tax shall be levied on goods and services for retails. After island-wide special customs operations are implemented, the taxation system shall be further simplified. 

The department of finance under the State Council, in conjunction with other relevant State Council departments and the Hainan provincial authorities, shall formulate a specific plan for the simplification of the taxation system in time.

Article 28 After island-wide special customs operations are implemented and the taxation system is simplified, the Hainan Free Trade Port shall implement catalogue management with respect to import dutiable products. No import duties shall be levied on products outside the catalogue entering the Hainan Free Trade Port. The catalogue of import dutiable products shall be produced by the department of finance under the State Council in conjunction with other relevant State Council departments and the Hainan provincial authorities.

Before island-wide special customs operations are implemented and the taxation system is simplified, the import duties, import value-added tax, and import consumption tax on certain imported goods shall be exempted.

Export duties shall be levied on export dutiable products exiting from the Hainan Free Trade Port. 

Article 29 Import duties shall be levied on goods entering China's mainland from the Hainan Free Trade Port as imports in principle. However, import duties shall be exempted for goods produced by the enterprises in encouraged industries if such goods do not incorporate imported materials and parts or if they incorporate imported materials and parts but are processed in the Hainan Free Trade Port and their value increases by a specific percentage as a result. The specific measures thereof shall be formulated by the relevant departments under the State Council in conjunction with the Hainan provincial authorities.

The value-added tax and consumption tax collected on goods entering the Hainan Free Trade Port from China's mainland shall be rebated in accordance with the relevant regulations of the State Council.

Before island-wide special customs operations are implemented and the taxation system is simplified, the import duties, the import value-added tax and the import consumption tax shall be exempted for duty-free articles that are purchased and taken delivery of by tourists when departing from the island in accordance with relevant regulations. After island-wide special customs operations are implemented and the taxation system is simplified, the tax administration measures for goods moving between the Hainan Free Trade Port and China's mainland shall be formulated by the relevant departments under the State Council in conjunction with the Hainan provincial authorities.

Article 30 Preferential enterprise income tax treatment shall be granted to eligible enterprises registered in the Hainan Free Trade Port. Individual income tax preference shall be given to eligible individuals in the Hainan Free Trade Port.

Article 31 A sound, efficient and unified system for tax collection and administration as well as related services shall be established in the Hainan Free Trade Port, which provides effective, informatized, international-standard-meeting, and easy-to-access services. The Hainan Free Trade Port shall actively participate in international cooperation in the area of tax collection and administration, improve the standard for and efficiency of tax collection and administration as well as related services, and protect the legitimate rights and interests of taxpayers. 

Chapter V

Eco-environmental Protection

Article 32 Improvements shall be made to the eco-environmental assessment and monitoring system of the Hainan Free Trade Port and an eco-environmental access list be formulated to prevent pollution and protect the environment. Improvements shall be made to the property rights system for natural resources and the system of paid use of natural resources of the Hainan Free Trade Port to promote economical and efficient resource use.

Article 33 The establishment of spacial planning system for the Hainan Free Trade Port shall be accelerated, under which tailored regulatory and control measures for different uses of natural ecological space shall be adopted, redlines for ecological conservation be strictly observed, a system of protected natural areas mainly consisting of national parks be formed, and green urbanization and the development of a beautiful countryside be promoted.

The marine environment of the Hainan Free Trade Port shall be strictly protected, and sound interregional mechanisms for ecosystem protection and restoration and for pollution prevention and control based on land-marine coordination shall be established. 

Article 34 The Hainan Free Trade Port shall adopt a stricter environmental-safety-related entry management system, strengthen inspection and quarantine capacity building, prevent the invasion of alien species, and prohibit the import of solid waste from abroad. The Hainan Free Trade Port shall improve its capacity for the treatment and disposal of hazardous waste such as medical waste, enhance its capacity for emergency preparedness and response to eco-environmental emergencies, and strengthen ecological risk prevention and control.

Article 35 A sustainable market-oriented compensation mechanism for ecological protection shall be established in the Hainan Free Trade Port, and it will be led by the government with the participation of enterprises and all other sectors of society. A mechanism for realizing the value of ecosystem products shall also be established to encourage the use of market mechanisms to promote eco-environmental protection and achieve sustainable development. 

Article 36 The Hainan Free Trade Port shall implement an accountability system and an assessment and evaluation system for achieving environmental protection targets. The rule shall be adopted that failing to achieve environmental protection targets shall be considered the failure of the annual assessment when the local people's governments at or above the county level conduct such assessments on their departments responsible for environmental supervision and administration and the leaders of these departments, as well as on the people's governments at the next lower level and their leaders.

For areas where environmental protection targets have not been attained, approvals of environmental impact assessment documents for projects with an increase in total emissions of major pollutants in these areas shall be suspended for one year. The principal leaders of the local people's government responsible for these failures and of the departments in charge of environmental supervision and administration shall not be promoted to higher positions or transferred to important posts within one year, and shall be given sanctions in accordance with the law. 

Article 37 The Hainan Free Trade Port shall implement a lifelong accountability system for eco-environmental damage. Where serious eco-environmental damage is caused due to disregard of the requirements for scientific development, the principal leaders, the persons directly in charge, and the other persons directly responsible of the local people's governments and their relevant departments shall be strictly held accountable.